Glacier Bancorp, Inc. Announces Results for the Quarter Ended March 31, 2020

1st Quarter 2020 Highlights:
Net income of $43.3 million for the current quarter, a decrease of $5.8 million, or 12 percent, over the prior year first quarter net income of $49.1 million.  The current quarter results include $19.1 million of credit loss expense related to the COVID-19 pandemic and $4.8 million of credit loss expense from the acquisition of State Bank Corp., consistent with the adoption of the current expected credit loss (“CECL”) accounting standard at the beginning of 2020.Including the impact from CECL, the current quarter diluted earnings per share of $0.46, a decrease of 21 percent from the prior year first quarter diluted earnings per share of $0.58.The loan portfolio organically grew $124 million, or 5 percent annualized, during the current quarter and increased $450 million, or 5 percent, from the prior year first quarter.The Company provided Small Business Administration (SBA) Payroll Protection Program (PPP) loans to businesses in its communities.  As of April 21, the Company had approved 8,775 PPP loans in the amount of $1.088 billion. Non-interest bearing deposits organically increased $37.6 million, or 4 percent annualized, during the current quarter and increased $293 million, or 10 percent, from the prior year first quarter.Non-performing assets as a percentage of assets was 0.26 percent, a 16 basis points decrease from the prior year first quarter.Early stage delinquencies as a percentage of loans was 0.41 percent, a 3 basis points decrease from the prior year first quarter.Purchased $723 million of municipal and corporate debt securities in the current quarter.Declared a quarterly dividend of $0.29 per share.  The Company has declared 140 consecutive quarterly dividends and has increased the dividend 45 times.On February 29, 2020, the Company completed the acquisition of State Bank Corp., the parent company of State Bank of Arizona, a community bank based in Lake Havasu City, Arizona with total assets of $744 million which significantly expanded our Company’s Arizona franchise.Financial Highlights ______________________________1 Includes a special dividend declared of $0.20 per share for the three months ended December 31, 2019.KALISPELL, Mont., April 23, 2020 (GLOBE NEWSWIRE) — Glacier Bancorp, Inc. (NASDAQ:GBCI) reported net income of $43.3 million for the current quarter, a decrease of $5.8 million, or 12 percent, from the $49.1 million of net income for the prior year first quarter.  Diluted earnings per share for the current quarter was $0.46 per share, a decrease of 21 percent from the prior year first quarter diluted earnings per share of $0.58.  “The outbreak of a global pandemic in the first quarter was one of the most difficult operating environments in decades and the Glacier team more than rose to the occasion to lead their teams and their communities through the difficult circumstances,” said Randy Chesler, President and Chief Executive Officer.  “The results highlight our exceptionally strong core business and high quality loan portfolio that we believe will weather this current storm and position Glacier to continue to excel over the long haul.”In response to the rapidly changing COVID-19 pandemic, our Bank division Presidents, the Company’s executive and senior management team, and all the front line staff have stepped up to lead the Company and the communities they serve through these uncertain times.  The Company seeks to provide the best possible service for customers, while protecting employees and shareholder value.  The Company is well positioned to mitigate the potential financial impact of COVID-19 with a strong liquidity and capital position.  The Company is confident that, while the full impact of the pandemic is unknown at this time, the strength of the Company and leadership team will ensure continued long-term success. The Company has implemented several measures to manage through the pandemic, including:launched a pandemic team that addresses the daily impact to our business;contacted customers to assess their needs and provide funding, flexible repayment options or modifications as necessary;designated a “command center” that supports employees so they can work with customers to provide the PPP loans;increased monitoring of credit quality and portfolio risk for industries determined to have elevated risk; anddeveloped safety measures for the health of our employees including elimination of unnecessary business travel, social distancing precautions, additional wellness and education programs, and preventative cleaning practices.The Company’s first quarter net income results were significantly impacted by adoption of the CECL accounting standard.  The Company chose to adopt the standard on January 1, 2020, rather than delay the adoption as allowed by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, since the Company was operationally prepared and already internally reporting under the CECL method.  As a result, the following items impacted the results in the first quarter 2020: a $12.3 million reduction in retained earnings upon adoption of the standard.a $19.1 million credit loss expense as a result of the COVID-19 pandemic.an additional $4.8 million credit loss expense due to the State Bank Corp. acquisition.The current quarter results were also impacted by the following items:acquisition-related expenses of $2.8 million.gain of $2.4 million on the sale of a former branch building.On February 29, 2020, the Company completed the acquisition of State Bank Corp., the parent company of State Bank of Arizona, a community bank based in Lake Havasu City, Arizona (collectively, “SBAZ”).  SBAZ provides banking services to individuals and businesses in Arizona with ten banking offices located in Bullhead City, Cottonwood, Kingman, Lake Havasu City, Phoenix, Prescott Valley and Prescott.  Upon closing of the transaction, SBAZ merged into the Company’s Foothills Bank division, which expanded the Company’s footprint in Arizona to cover all major markets in the state and be a leading community bank in Arizona.  During the current quarter, the Company also completed the system core conversion for SBAZ. The Company’s results of operations and financial condition include the SBAZ acquisition and the following table discloses the preliminary fair value estimates of selected classifications of assets and liabilities acquired:Asset Summary
Total debt securities of $3.634 billion at March 31, 2020 increased $834 million, or 30 percent, during the current quarter and increased $856 million, or 31 percent, from the prior year first quarter.  The current quarter increase in debt securities was the result of acquiring $142 million of debt securities with the SBAZ acquisition and purchasing $723 million of municipal and corporate bonds in March.  These additional securities provide a low-risk, stable earnings stream.  Debt securities represented 24 percent of total assets at March 31, 2020 compared to 20 percent at December 31, 2019 and 23 percent of total assets at March 31, 2019. The loan portfolio of $10.088 billion increased $124 million, or 5 percent annualized, during the current quarter excluding the SBAZ acquisition, with the largest increase in other commercial loans which increased $100 million.  Excluding the current year acquisition and the prior year acquisitions of Heritage Bank of Nevada and The First National Bank of Layton, the loan portfolio increased $450 million, or 5 percent, since the prior year first quarter with the largest increase in other commercial loans which increased $201 million, or 11 percent.Supplemental information regarding credit quality and identification of the Company’s loan portfolio based on regulatory classification is provided in the exhibits at the end of this press release.  The regulatory classification of loans is based primarily on collateral type while the Company’s loan segments presented herein are based on the purpose of the loan.Credit Quality SummaryNon-performing assets of $39.4 million at March 31, 2020 increased $1.9 million, or 5 percent, over the prior quarter and decreased $11.5 million, or 23 percent, over the prior year first quarter.  Non-performing assets as a percentage of subsidiary assets at March 31, 2020 was 0.26 percent, a decrease of 1 basis point from the prior quarter, and a decrease of 16 basis points from the prior year first quarter.  Early stage delinquencies (accruing loans 30-89 days past due) of $41.4 million at March 31, 2020 increased $18.2 million from the prior quarter and increased $4.5 million from the prior year first quarter.  Early stage delinquencies as a percentage of loans at March 31, 2020 was 0.41 percent, which was an increase of 17 basis points from prior quarter and a 3 basis points decrease from prior year first quarter. The Company’s adoption of the CECL accounting standard resulted in a $3.7 million increase in the allowance for credit losses (“allowance”).  The allowance as a percentage of total loans outstanding at March 31, 2020 was 1.49 percent, which was an 18 basis point increase compared to the prior quarter.  The increase in the allowance during the current quarter was attributable to the Company recognizing $19.1 million of credit loss expense related to COVID-19 and an additional $4.8 million of credit loss expense related to the SBAZ acquisition.Credit Quality Trends and Credit Loss ExpenseNet charge-offs for the current quarter were $813 thousand compared to $1.0 million for the prior quarter and $1.5 million from the same quarter last year.  The current quarter credit loss expense was $22.7 million compared to $57 thousand in the prior year first quarter.  Loan portfolio growth, composition, average loan size, credit quality considerations, economic forecasts and other environmental factors will continue to determine the level of the credit loss expense. 
Liability SummaryCore deposits of $11.495 billion as of March 31, 2020 increased $168 million or 6 percent annualized, from the prior quarter excluding the acquisition of SBAZ with non-interest bearing deposits increasing $37.6 million, or 4 percent annualized, during the current quarter.  Excluding current and prior year acquisitions, core deposits increased $500 million, or 5 percent, from the prior year first quarter with non-interest bearing deposits increasing $293 million, or 10 percent.  Non-interest bearing deposits were 34 percent of total core deposits at March 31, 2020, an increase of 2 percent from 32 percent of total core deposits at March 31, 2019.Wholesale deposits of $62.9 million at March 31, 2020 increased $9.6 million from prior quarter and decreased $130 million from the prior year first quarter.  Federal Home Loan Bank (FHLB) advances of $513 million at March 31, 2020 increased $474 million from the prior quarter and increased $358 million from the prior year first quarter, such increases were to supplement the current quarter deposit growth used to fund the asset growth, including the additional  investment purchases.  Wholesale deposits and FHLB advances will continue to fluctuate as necessary for balance sheet growth and to supplement liquidity needs of the Company.During March of the current quarter, the Company purchased interest rate caps with a notional amount of $131 million (tied to 3 month Libor) to limit interest expense on the Company’s trust preferred subordinated debt.  The interest rate caps effectively convert the variable interest expense on the debt to a fixed rate of 3.93 percent when 3 month Libor exceeds 1.88 percent at anytime during the five year term of the interest rate caps.Stockholders’ Equity SummaryTangible stockholders’ equity of $1.560 billion at March 31, 2020 increased $119 million, or 8 percent, compared to the prior quarter which was the result of $112 million of Company stock issued for the acquisition of SBAZ and earnings retention; such increases more than offset the increase in goodwill and core deposits associated with the acquisition and the $12.3 million decrease from the adoption of the current expected credit loss model.  Tangible book value per common share of $16.35 at current quarter end increased $0.74 per share from the prior quarter and increased $2.00 per share from a year ago.Cash Dividends
On March 25, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share.  The dividend was payable April 16, 2020 to shareholders of record on April 7, 2020. The dividend was the 140th consecutive dividend.  Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations. 
Operating Results for Three Months Ended March 31, 2020 
Compared to December 31, 2019 and March 31, 2019
Income SummaryNet Interest Income
The current quarter net interest income of $134 million decreased $2.1 million, or 2 percent, over the prior quarter and increased $19.2 million, or 17 percent, from the prior year first quarter.  The current quarter interest income of $143 million decreased $2.4 million, or 2 percent, over the prior quarter which was driven primarily by a decrease in loan interest rates.  The current quarter interest income increased $16.7 million, or 13 percent, over prior year first quarter and was attributable to an increase in interest income on commercial loans due to an increase in loans, which increased $15.1 million, or 18 percent, from the prior year first quarter.
The current quarter interest expense of $8.5 million decreased $337 thousand, or 4 percent, over the prior quarter as a result of a decrease in interest rates.  Current quarter interest expense decreased $2.4 million, or 22 percent, over prior year first quarter which was due to the decrease in higher cost FHLB advances.  During the current quarter, the total cost of funding (including non-interest bearing deposits) declined 1 basis point to 29 basis points compared to 30 basis points for the prior quarter and 43 basis points for the prior year first quarter.The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.36 percent compared to 4.45 percent in the prior quarter.  The core net interest margin, excluding  $1.2 million, or 4 basis points, of discount accretion and $655 thousand, or 2 basis points, of non-accrual interest recoveries, was 4.30 percent compared to 4.33 in the prior quarter and 4.26 percent in the prior year first quarter.  The Company experienced a 3 basis points decrease in the core net interest margin during the current quarter from decreased yields on loans that more than offset the decrease in the cost of funding.  The core net interest margin increased 4 basis points from the prior year first quarter primarily the result of a decrease in funding cost and reduced reliance on higher cost wholesale funding.  “We were pleased that the core net interest margin remained stable during the current quarter compared to the prior quarter,” said Ron Copher, Chief Financial Officer.              Non-interest Income
Non-interest income for the current quarter totaled $33.3 million which was an increase of $4.9 million, or 17 percent, over the prior quarter and an increase of $4.8 million, or 17 percent, over the same quarter last year.  Service charges and other fees of $14.0 million for the current quarter decreased $4.0 million, or 22 percent, from the prior year first quarter due to the Company’s decrease in interchange fees as a result of the Durbin Amendment that more than offset the increased transaction activity.  As of July 1, 2019, the Company became subject to the Durbin Amendment which established limits on the amount of interchange fees that can be charged to merchants for debit card processing.  Gain on the sale of loans of $11.9 million for the current quarter increased $1.7 million, or 17 percent, compared to the prior quarter and increased $6.1 million, or 105 percent, from the prior year first quarter principally due to the increased refinance activity driven by the decrease in interest rates.  Other income of $5.2 million increased $3.4 million from the prior quarter and increased $1.8 million from the prior year first quarter, primarily as a result of a $2.4 million gain on the sale of a former branch building in the current quarter.
Non-interest Expense SummaryTotal non-interest expense of $92.0 million for the current quarter decreased $3.3 million, or 3 percent, over the prior quarter and increased $9.1 million, or 11 percent, over the prior year first quarter.  Compensation and employee benefits increased by $4.1 million, or 7 percent, from the prior quarter as result of increased employees from the SBAZ acquisition and annual salary increases and benefit adjustments.  Compensation and employee benefits increased $6.9 million, or 13 percent, from the prior year first quarter primarily due to an increased number of employees driven by current and prior year acquisitions.  Occupancy and equipment expense increased $782 thousand, or 9 percent, over the prior year first quarter primarily as a result of increased costs from acquisitions.  Data processing expense increased $310 thousand, or 6 percent, over the prior quarter and increased $1.4 million, or 36 percent, over the prior year first quarter as a result of the current and prior year acquisitions.  Regulatory assessment and insurance increased $1.0 million from the prior quarter as a result of a decrease in the amount of Small Bank Assessment credits applied by the FDIC.  The Company received $530 thousand of Small Bank Assessment credits during the current quarter compared to $1.3 million in the prior quarter.  Regulatory assessment and insurance decreased $195 thousand, or 15 percent, over prior year first quarter and was driven by the current quarter FDIC credits which offset the increased cost from organic and acquisition growth.  Other expenses of $11.5 million, decreased $8.1 million, or 41 percent, from the prior quarter and was due to a $3.6 million decrease in expense related to unfunded loan commitments, a $1.6 million decrease in acquisition-related expenses and smaller decreases in several other categories.  The current quarter decrease in expense related to unfunded loan commitments was driven by a decreased loss rate on certain portfolio segments, primarily the construction segments.  Other expenses included acquisition-related expenses of $2.8 million in the current quarter compared to $4.4 million in the prior quarter and $214 thousand in the prior year first quarter.Federal and State Income Tax Expense
Tax expense during the first quarter of 2020 was $9.6 million, a decrease of $2.6 million, or 21 percent, compared to the prior quarter and a decrease of $2.0 million, or 17 percent, from the prior year first quarter.  The effective tax rate in the current quarter was 18 percent which compares to 18 percent in the prior quarter and 19 percent prior year first quarter.
Efficiency Ratio
The current quarter efficiency ratio was 52.55 percent, a 235 basis points decrease from the prior quarter efficiency ratio of 54.90 percent which was due to controlling costs, a decrease in expense related to unfunded loan commitments and the increase in non-interest income.  The current quarter efficiency ratio decreased 282 basis points from the prior year first quarter efficiency ratio of 55.37 percent which was driven by the increased commercial loan interest income and gain on sale of loans which more than offset decreases in service fee income from the Durbin amendment and increased operating costs.
Forward-Looking Statements 
This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, statements about management’s plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,” “projects,” “seeks,” “estimates” or words of similar meaning.  These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control.  In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.  The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations in the forward-looking statements, including those set forth in this news release:
the risks associated with lending and potential adverse changes of the credit quality of loans in the Company’s portfolio;changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System or the Federal Reserve Board, which could adversely affect the Company’s net interest income and profitability;changes in the cost and scope of insurance from the Federal Deposit Insurance Corporation and other third parties;legislative or regulatory changes, such as the recently adopted CARES Act addressing the economic effects of the COVID-19 pandemic, as well as increased banking and consumer protection regulation that adversely affect the Company’s business, both generally and as a result of the Company exceeding $10 billion in total consolidated assets;ability to complete pending or prospective future acquisitions;costs or difficulties related to the completion and integration of acquisitions;the goodwill the Company has recorded in connection with acquisitions could become impaired, which may have an adverse impact on earnings and capital;reduced demand for banking products and services;the reputation of banks and the financial services industry could deteriorate, which could adversely affect the Company’s ability to obtain and maintain customers;competition among financial institutions in the Company’s markets may increase significantly;the risks presented by continued public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital or grow the Company through acquisitions;the projected business and profitability of an expansion or the opening of a new branch could be lower than expected;consolidation in the financial services industry in the Company’s markets resulting in the creation of larger financial institutions who may have greater resources could change the competitive landscape;dependence on the Chief Executive Officer, the senior management team and the Presidents of Glacier Bank divisions;material failure, potential interruption or breach in security of the Company’s systems and technological changes which could expose us to new risks (e.g., cybersecurity), fraud or system failures;natural disasters, including fires, floods, earthquakes, and other unexpected events;the Company’s success in managing risks involved in the foregoing; andthe effects of any reputational damage to the Company resulting from any of the foregoing.The Company does not undertake any obligation to publicly correct or update any forward-looking statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement.Conference Call InformationA conference call for investors is scheduled for 11:00 a.m. Eastern Time on Friday, April 24, 2020. The conference call will be accessible by telephone and webcast. Interested individuals are invited to listen to the call by dialing 877-561-2748 and conference ID 8916519. To participate on the webcast, log on to: https://edge.media-server.com/mmc/p/nimct5u3. If you are unable to participate during the live webcast, the call will be archived on our website, www.glacierbancorp.com, or by calling 855-859-2056 with the ID 8916519 by May 8, 2020.In connection with this Earnings Release, we are also providing Supplemental Information for investors.About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. is the parent company for Glacier Bank and its Bank divisions: Bank of the San Juans (Durango, CO), Citizens Community Bank (Pocatello, ID), Collegiate Peaks Bank (Buena Vista, CO), First Bank of Montana (Lewistown, MT), First Bank of Wyoming (Powell, WY), First Community Bank Utah (Layton, UT), First Security Bank (Bozeman, MT), First Security Bank of Missoula (Missoula, MT), First State Bank (Wheatland, WY), Glacier Bank (Kalispell, MT), Heritage Bank of Nevada (Reno, NV), Mountain West Bank (Coeur d’Alene, ID), North Cascades Bank (Chelan, WA), The Foothills Bank (Yuma, AZ), Valley Bank of Helena (Helena, MT), and Western Security Bank (Billings, MT).
Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Financial Condition

Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations
Glacier Bancorp, Inc.
Average Balance Sheets
______________________________ Includes tax effect of $1.3 million and $1.1 million on tax-exempt municipal loan and lease income for the three months ended March 31, 2020 and 2019, respectively.
Total loans are gross of the allowance for credit losses, net of unearned income and include loans held for sale.  Non-accrual loans were included in the average volume for the entire period.
3   Includes tax effect of $1.9 million and $2.0 million on tax-exempt debt securities income for the three months ended March 31, 2020 and 2019, respectively.
4   Includes tax effect of $266 thousand and $293 thousand on federal income tax credits for the three months ended March 31, 2020 and 2019, respectively.
5   Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts.
Glacier Bancorp, Inc.
Loan Portfolio by Regulatory Classification
______________________________1 Loans held for sale are primarily 1st lien 1-4 family loans.Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification
Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)
______________________________n/m – not measurableGlacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)
Visit our website at www.glacierbancorp.com
CONTACT: Randall M. Chesler, CEO
(406) 751-4722
Ron J. Copher, CFO
(406) 751-7706

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